Chad Loweth’s Art Investing Strategy

Barron’s Penta column spoke to former SAC and Diamondback hedgie Chad Loweth about his approach to art as an asset:

Loweth began collecting art eight years ago, educating himself with trips to ArtBasel, and now has a collection of some 80 works. He compares the premium priced artworks of, say, Pablo Picasso or Gerhard Richter with the Nifty Fifty, a reference to 50 hot large-cap stocks in the 1960s that investors were encouraged to buy regardless of price. They may be liquid investments, he explains, but they are also over­valued. Similar to how the Nifty Fifty fell out of favor in the 1970s and 1980s, Loweth predicts a crash in such high-priced artworks. […]

So Loweth, perhaps not unwisely, is instead buying art in the “mid-cap space,” which he defines as the $30,000-to-$75,000 price range. Loweth figures there are 50,000 artists in New York City, with only 500 or so selling pieces above $30,000. If you diversify across 25 artists, he says, and buy what you love, “one of those artists will likely be a star, and you will at least be able to get your money back.”